The Effects of Trade Liberalization on Dairy Trade and Domestic Milk Production in CARICOM

Domestic milk production in the major CARICOM states appears to be in crisis, with shrinking domestic production and increasing milk imports. This paper therefore investigates the impact of trade liberalization on domestic milk production and imports in Jamaica, Trinidad and Tobago and Barbados and determines trade factors that influence changes in these variables. The study demonstrates the dominance of dairy imports into CARICOM from New Zealand and the EU and the significant effects of trade liberalization in causing structural changes in domestic milk production and imports in the cases of Barbados and Jamaica. Changes in GDP per capita highly influence changes in milk imports for the three countries and for Jamaica also the price of imported powdered milk. The Nestle countries, Jamaica, and Trinidad and Tobago show greater declines in milk production than Barbados, therefore further research is recommended on the role of Nestle in the Caribbean milk industry.